Blurry line between 'social welfare,' politics

Updated 12:30 am, Thursday, August 23, 2012

A few months ago, the San Antonio Tea Party attained a status it had been seeking for years, one described in section 501(c)(4) of the tax code as a “social welfare organization.”

Before the IRS conferred this status, enabling the group to raise funds without revealing donors, it was forced to submit to “a series of intrusive and very extensive questions,” according to its president, Allen Tharp.

“It was a lot of questions asked that were out of the norm,” Tharp says. “It was a lot of things they certainly did not ask of any occupy group or anything.”

The tea party erupted three years ago as a fiery political force opposing the economic policies of President Barack Obama, and its acolytes have since proven transformative in state and national politics, mobilizing to keep Republican officeholders extremely fiscally conservative.

What's surprising, however, is the official definition of a tax-exempt “social welfare organization,” which “must be operated exclusively to promote social welfare,” according to the IRS.

“To be operated exclusively to promote social welfare, an organization must operate primarily to further the common good and general welfare of the people of the community.”

How is this accomplished?

“The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.

“However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.”

Tharp, who's also founder and CEO of the Lion & Rose pubs, declined to say what sort of questions the IRS asked, but I suspect the agency was trying to discern the scope of the local tea party's political activity.

That sort of scrutiny is what drove George Rodriguez, its former president, to resign.

“I was more interested in getting out and doing politics,” Rodriguez said. “Our folks were just a little scared of getting in trouble. I think what most tea parties are doing now, to stay as clean as possible, is not getting involved in campaigns, just staying strictly informational and educational.”

The question of exactly what a “social welfare organization” cannot do is now a matter of national relevance.

In the news this week that Mitt Romney's presidential campaign is thrashing Obama's in fundraising, a fact emerged that the biggest outside spenders in the advertising war are 501(c)(4) groups.

And the conservative species of these shadowy organizations are vastly outspending their liberal counterparts, to the tune of $70 million to $1.6 million, according to ProPublica.

Their justification for existing, of course, is explicitly not to support or oppose any candidates.

The real question, then: What form of social welfare are these groups bestowing upon society other than spending money to support or oppose candidates of their choice?

Consider the local tea party, which spends its money on “yard signs, pamphlets, printouts of all sorts,” some opposing the president's policies.

“We do a lot of training on the topics,” Tharp said. “We put together seminars to educate people on things, like, for example, Obamacare.”

In case you're wondering, Tharp isn't a fan.

“As a businessperson, I can tell you that that is the most damaging law that has ever been passed,” he said. “They talk about Taxmageddon coming up at the end of the year. Taxmageddon is not good for business and it will hurt the economy, but that's nothing compared to what Obamacare is going to do.